Euro to US Dollar Exchange Rate Recovers and Climbs as USD Demand Fades
While demand for safe haven currencies caused the Euro to US Dollar (EUR/USD) exchange rate to hit its worst levels in almost a year this week, the pair mounted a more solid recovery towards the end of the week.
After opening this week at the level of 1.1601, EUR/USD spend most of the week edging lower. On Thursday, EUR/USD touched on a low of 1.1517 – the pair’s worst level since July 2017.
During Thursday’s session though, EUR/USD mounted a solid recovery due to underwhelming US data. On Friday, stronger-than-expected Eurozone ecostats saw EUR/USD climb even higher. At the time of writing, the pair trended near a weekly high of 1.1669.
Economists had expected that the Eurozone’s economic growth was quickly slowing since its strong growth rate last year. However, Friday’s Eurozone PMI data indicated that growth may have been a little more resilient than expected.
Euro (EUR) Exchange Rates Firm and Advance on Stronger Eurozone Data
Could the Eurozone’s quick slowing of economic growth have come to an end? Friday’s Eurozone PMI projections from Markit beat forecasts in many areas, particularly in services and composite prints, bolstering expectations that the bloc’s growth was resilient.
Moreover, the data indicated that Eurozone business activity was not being hugely influenced by trade protectionism and tariff plans from US President Donald Trump.
However, the Euro’s gains were limited as the data showed that manufacturing was still dragging slightly behind expectations. There were also signs that June’s stronger performance may not lead to a sustained improvement.
According to Markit Chief Economist Chris Williamson:
‘The June uptick could be at least in part explained by business returning to normal after an unusually high number of public holidays in May, suggesting that the underlying trend remains one of slower growth. …
Manufacturing is looking especially prone to a further slowdown in coming months, with companies citing trade worries and political uncertainty as their biggest concerns.’
All in all, this and further relief in Eurozone political jitters was enough to help the Euro to recover from lows versus the US Dollar (USD), but US Dollar weakness also played a part.
US Dollar (USD) Exchange Rates Sold from Highs on Signs of Trade Unease
Widespread market demand for safe haven currencies throughout the week had kept the US Dollar buoyant for most of the week.
While economists expected that protectionist trade tariffs from US President Donald Trump would have a negative impact on the US economy too, investors continued to buy the safe US Dollar regardless.
However, that sentiment faded on Thursday when June’s Philadelphia Fed manufacturing index was published, coming in well short of forecasts.
Analysts had forecast the manufacturing print would slow from 34.4 to 28.9, but it instead tumbled to just 19.9.
The data indicated that recent strong US growth could be slowing, with some investors concerned it showed deeper concern from manufacturers about the possibility of a US-China trade war.
Euro to US Dollar (EUR/USD) Forecast: Eurozone Inflation and US Growth Data Ahead
Next week is set to be a big one for Eurozone and US data, and if the week’s biggest ecostats surprise investors it could influence the course of Euro to US Dollar (EUR/USD) exchange rate trade.
Investors will remain focused on trade tariff jitters which will continue to influence both the Euro (EUR) and US Dollar (USD), and any comments from European Central Bank (ECB) officials may influence the Euro.
On top of that though, notable datasets will be published every day throughout the week.
Ifo’s German business confidence stats and US new home sales data will come in on Monday, followed by CB’s US consumer confidence survey on Tuesday. US durable goods orders and wholesale inventories will be published on Wednesday.
By far most of the week’s most influential ecostats will come in on Thursday and Friday though.
Eurozone confidence figures, German inflation and US growth results from Q1 will be published on Thursday, followed by German unemployment, Eurozone inflation and US Personal Consumption Expenditure (PCE) data on Friday.
With all the growth and inflation stats due next week, European Central Bank and Federal Reserve bets could be influenced too.